In this case, a former Cardinal employee alleged that the distributor and numerous oncology practices had engaged in a conspiracy to submit false claims to Medicare based on the payment and receipt of up-front rebates, or "pre-bates." Although other defendants, including Cardinal, paid millions of dollars in settlements, the client followed Anthony Mahajan's advice to litigate the case. Subsequently, the court dismissed the case in its entirety, sparing the practice millions of dollars in alleged false claims and penalties.

Whistleblower Complaints May Lead to Medicare Audits

Under the federal False Claims Act, whistleblowers are incentivized to report potential fraud, waste, or abuse to the government through the filing of what is referred to as a "relator" complaint. These complaints are filed under seal with the Department of Justice or U.S. Attorney's Office for the relevant jurisdiction, and involve only claims submitted to government payors, such as Medicare or Tricare, not commercial plans.

The federal government is obligated to investigate the allegations contained in a false claims complaint. One of the ways in which the government investigates the validity of paid claims is through an audit of Medicare claims. These audits may be conducted by Recovery Auditors, such as Cotiviti, or Medical Review Contractors, such as Noridian. In addition, Safeguard Services and Qlarant also conduct Medicare audits on behalf of the Centers for Medicare & Medicaid Services (CMS).

Medicare Audits May Result in Referrals to Law Enforcement

Medicare audits require special attention and care because there are a number of government regulatory and law enforcement agencies with responsibility for recovering potential overpayments on Medicare claims. In addition, Medicare audit contractors may be particularly aggressive because they are compensated based on recoveries.

In cases that involve substantial overpayments, the Medicare auditor may refer the case for further investigation to OIG, FBI or other investigative agency. Accordingly, it is important to seek the advice of an experienced Medicare audit attorney in the event that you or your business are audited. Retaining a Medicare audit defense lawyer early in the process also will provide the most flexibility and best opportunities for a successful resolution.

Department of Justice Lawsuit Against Cardinal

Following a federal investigation into Medicare claims by the U.S. Attorney's Office for the District of Massachusetts, the government filed a complaint alleging that Cardinal had paid "kickbacks" to dozens of cancer centers in the form of upfront credits for the future purchase of specialty pharmaceuticals. Cardinal subsequently settled the case for $13 million.

In addition, the relator alleged that Cardinal's clients had accepted "kickbacks," in the form of upfront pre-bates, in return for purchasing medications from Cardinal. Accordingly, following Cardinal's settlement, the lawsuit continued against approximately 10 practices in federal district court.

Relator's Lawsuit Against Oncology Dispensing Practices

Several of the medical practices paid significant settlements to resolve the government's claim, but Anthony Mahajan's client relied on his advice to litigate the case. This meant that the practice could be exposed to significant liability, including millions of dollars in false claims and penalties, absent a victory at trial.

Anthony Mahajan subsequently filed a motion to dismiss on behalf of the practice, Northwest Medical Specialties, together with motions brought by four other physician practices, Birmingham Hematology & Oncology Associates, Oncology Specialties, Dayton Physicians, and Health First Medical Group. Anthony Mahajan's motion to dismiss can be found HERE.

The Court's Dismissal of the False Claims Case

Ultimately, the federal court agreed that dismissal of the lawsuit was required. Specifically, the Court found that the case was barred, and could not continue against Anthony Mahajan's client or the other remaining defendants. The Court's opinion can be found HERE, and resulted in the termination of all proceedings against Northwest Medical.

HLA's Federal Audit & Investigations Experience

If you are facing an aggressive Medicare audit, whistleblower lawsuit, or other federal investigation with potentially severe consequences, do not hesitate to turn to our healthcare defense team. With more than 40 years combined experience at the highest levels of industry, we specialize in neutralizing regulatory challenges at an early stage so you can focus on delivering exceptional patient care.